Dairy UK’s Director General Jim Begg has spoken out in response to the findings of the Environment Food and Rural Affairs (EFRA) committee published last week. Evaluating the European Commission’s proposed ‘Milk Package,’ the EFRA committee said more needed to be done by the UK government to empower dairy farmers, who are currently going out of business at the rate of one a week.

Mr Begg said he welcomed the committee’s findings and agreed with them to an extent, but warned of the "unintended consequences," including price rises for dairy products, of the more transparent contracts pushed for by the EFRA committee. He did, however, state, "The most important conclusion of the committee is that, in the implementation of the EU Dairy Package, effective competition law must remain in place where producer organisations are concerned."

Mr Begg continued, "We believe that this is necessary to stimulate investment and encourage growth in the British dairy industry. In its conclusion the Select Committee is supporting the views of the European Parliament, the UK Government and Dairy UK."

Nevertheless, EFRA committee chair Anne McIntosh has stood by the committee’s findings. Ms McIntosh, MP for Thirsk and Malton in Yorkshire, wrote an article in The Yorkshire Post outlining steps the government must take in order to see a secure future for dairy farmers in the UK.

Ms McIntosh pointed out that in the UK almost 90 per cent of milk is processed by just five companies, that 90 per cent of the UK’s milk is sold in supermarkets and that this has resulted in a situation whereby the system of contracts between farmers and processors currently falls short of EC standards, affording farmers little certainty and confidence.

McIntosh says government should stick by EFRA recommendations. 

McIntosh reiterated the committee’s recommendations that “written contracts between farmers and dairy processors should specify either the raw milk price or the principles underpinning price, as well as the volume and timing of deliveries, and the duration of the contract.”

She said the committee was not convinced that, should the process remained voluntary, dairy processors would make their contracts more transparent; the EFRA MPs called for Defra to make the new form of contract compulsory in their report. 

Furthermore, in today’s article Ms McIntosh levelled criticism at the discrepancies between prices paid by supermarkets for bottled milk compared to those paid for milk destined for other dairy products. She said, “The price per litre of milk more than doubles between leaving the farm gate and being sold as bottled milk or cheese by retailers... there needs to be a more sustainable distribution of profit margins along the supply chain.”

Although she acknowledged that some supermarkets do pay a premium for their bottled milk, she revealed that only a fraction of dairy farmers actually benefit from this situation and repeated her committee’s calls for more equitable farm-gate prices to be paid for milk used in all dairy products, including their own-brand cheese and butter.

McIntosh concluded, “I hope the Government will respond positively to our recommendations by not just signing up to the EU proposals for the dairy sector, but going that little bit further to enable dairy farmers to grasp the golden opportunity of quotas being abolished and rising world demand for dairy products.”